New York Markets After Hours

Asia stocks shine after Dow hits record

SarahTurner

SYDNEY (MarketWatch) — Asian stocks gained ground on Wednesday, from Tokyo to Sydney, a day after the Dow industrials hit an all-time high, with central-bank policy helping spur equity buying.

Adding to a near-2% gain made so far this week on optimism for another round of policy loosening to lift the Japanese economy out of deflation, the Nikkei Stock Average
NIK, -1.05%
rallied to finish with a 2.1% gain to end at its highest level in 4-1/2 years.

In Hong Kong, the Hang Seng Index
HSI, +0.18%
sat 0.9% higher in late afternoon trades, while the Shanghai Composite Index
000001, +0.57%
was up 0.7% on the Chinese mainland, with the annual session of the National People’s Congress in full swing.

On Tuesday, China’s departing premier announced an unchanged 7.5% gross-domestic-product growth target for China in 2013.

Reuters

In other Asian economic news, data out Wednesday showed that the Australian economy grew at 0.6% in the fourth quarter of 2012, meeting economist expectations, for annual growth of 3.1%. The growth was helped by a swathe of interest-rate cuts made last year Read: Australia's economy grows on exports, rate cuts

“The medium-term picture still looks favorable, in our opinion. Although we foresee little stimulus from the macro side in the first half of 2013, we see limited potential for downside surprises, unlike in 2012. At the same time, central banks are being very accommodative and are acting as a put option for the capital markets,” said Crédit Suisse Asset Management emerging-markets strategist Adrian Zuercher.

“The dearth of investment alternatives in an environment of record-low market interest rates by now across almost every fixed-income asset segment remains the most compelling argument in favor of stocks. The prevailing ‘yield drought’ is veritably forcing investors into stocks,” Zuercher said.

While the Dow industrials
DJIA, -1.11%
ended at a record, most Asia benchmarks have a long way to go to match that performance. The Nikkei Average, for example, remains around 70% off its record closing high of 38,915.87, hit in December 1989, just ahead of the bubble bursting that resulted in Japan’s “Lost Decade.”

Other Asian benchmarks also well shy of their all-time records included the Kospi — around 10% off its 2,228.96 record close reached May 2, 2011 — and the Australian market — around 25% off its 6,828.71 record on Nov. 1, 2007.

Chinese markets are also well below all-time highs. Hong Kong reached its record of 31,638.22 on Oct. 30, 2007, while Shanghai’s highest ever close of 6,092.06 was hit Oct. 16 of the same year.

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